Forex-novosti i prognoze od 23-04-2021

Gold price to surge above $1,900 fueled by a dovish Fed - TDS

FXStreet notes that after a challenging three months, gold is again starting to find its mojo and may soon attempt to challenge key resistance at just above $1,800/oz. Inflation "head fake" and dovish fed may be a manna for XAU/USD, according to strategists at TD Securities.

“It would not be a surprise to see gold move modestly north of $1,800/oz in the not too distant future, as it looks as though the curve overreacted back in March when yields jumped, and it appears that a steady-state has been reached for a time before US10s move toward two percent by the end of the year.”

“Before the yellow metal shoots through key resistance levels and rallies another $120/oz to our year-end target, the market will need to have a higher level of confidence that the rise in rates won't be re-energized by more favorable economic data, and that the Fed will prevent rates from rising to the point where they can adversely impact financial conditions.”

The U.S. Commerce Department announced on Friday that the sales of new single-family homes jumped 20.7 percent m-o-m to a seasonally adjusted annual rate of 1,021,000 units in March. This was the highest reading since August 2006.

Economists had forecast the sales pace of 886,000 last month.

February’s sales pace was revised up to 846,000 units from the originally reported 775,000 units.

According to the report, new home sales in the South, the largest area, climbed 40.2 percent m-o-m in March. Meanwhile, sales in the Midwest surged 30.7 percent m-o-m and those in the Northeast rose 20.0 percent m-o-m. In the West, however, new home sales tumbled 30.0 percent m-o-m in March.

In y-o-y terms, new home sales were up 66.8 percent in March.

Preliminary data released by IHS Markit on Friday revealed that U.S. private sector business activity recorded its record expansion in April.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 60.6 in April, up from 59.1 in March. The latest reading pointed to a record expansion in factory activity. Economists had expected the reading to increase to 60.5. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. Manufacturers noted a steep increase in output during April, but many firms stated that production capacity was hampered by an inability to source raw materials and inputs in a timely manner. Subsequently, backlogs of work grew markedly. Meanwhile, input costs rose at the sharpest rate since July 2008 due to severe supplier shortages and significant rises in transportation fees.

The Markit flash services purchasing manager's index (PMI) jumped to 63.1 in April, up from 60.4 in the previous month. Economists had expected the reading to grow to 61.9. The rate of expansion was the fastest since data collection for the series began in October 2009, driven by stronger client demand and the reopening of many businesses amid the easing of restrictions. New business growth accelerated notably to the sharpest on record, with total sales supported by a solid advance in new export orders. In line with an improvement in customer demand, the level of outstanding business increased at the steepest rate since September 2020, while the pace of job creation was the fastest since November 2020.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 62.2 in April, up from 59.7 in March, reaching the highest level since data collection began in October 2009.

Chris Williamson, Chief Business Economist at HIS Markit noted: “The US economy is enjoying a strong start to the second quarter, firing on all cylinders as loosening virus restrictions, an impressive vaccine roll-out, a brighter outlook and stimulus measures all helped boost demand.”

Before the bell: S&P futures +0.09%, NASDAQ futures +0.14%

U.S. stock-index futures traded flat on Friday, as investors continued to assess the implications of the capital-gains tax hike for the equity market and digested a fresh batch of earnings reports.

Global Stocks:

Bert Colijn, a Senior Economist at ING, suggests that the eurozone economy looks like it's on the brink of a startling recovery. 

"Only months ago it seemed to be rapidly turning into the weak link among advanced markets, being slow out the gates with vaccinations, seeing lockdowns extended and having weaker fiscal support. True, first-quarter GDP growth figures are set to still show declines, but the April PMI adds to a lot of encouraging underlying numbers."

"The composite PMI jumped from 53.2 to 53.7, indicating that month-on-month improvements in output are happening. While lockdowns still weigh massively on service sector performance, small easings of restrictions did cause the service sector PMI to increase from 49.6 to 50.3 this month, the first reading indicating improving output since August."

"While industrial production has shown some weakness in recent months due to input shortages, the PMI confirms that the only thing holding back manufacturing for the moment is the ability to produce."

"Consumer confidence already showed a surprising improvement this month, which indicates that domestic demand is set to rebound once the economy reopens. Thanks to the large inflow of vaccinations this quarter, that prospect is closer than some may think. This is reflected in service sector optimism seen in the PMI today, which includes some of the hardest-hit sectors from lockdowns."

"All in all, the picture is improving for the eurozone economy."

(company / ticker / price / change ($/%) / volume)

Microsoft (MSFT) initiated with an Outperform at Wolfe Research; target $290

Salesforce (CRM) initiated with an Outperform at Wolfe Research; target $270

Cisco (CSCO) resumed with a Sector Weight at KeyBanc Capital Markets

Alcoa (AA) resumed with an Overweight at JP Morgan; target raised to $39

FXStreet reports that the Credit Suisse analyst team notes that AUD/USD remains trapped in a short-term range after repeatedly struggling to break 0.7700/7690, however below here would turn the near-term risk lower.

“A sustained move below 0.7700/7690 would still turn the risks lower within the range, with the next support just below here at 0.7680/74. Beneath here would open up a move back to 0.7588/86, then the 0.7532 low. Removal of here would decisively reassert the broader topping theme and end the new, broader range.” 

"Only above 0.7839/49 would resolve the range to the upside and instead confirm a resumption of the broader bull trend."

• Vaccination campaign is on track
• We're over 123 million vaccinations in EU
• Working on new contract with Pfizer

EUR rose against most of its major rivals in the European session on Friday after the release of better-than-expected manufacturing and services PMIs from the Eurozone.

Flash data from IHS Markit revealed that the Eurozone's business activity grew more than expected in early April, with the pace of expansion accelerating to the fastest since July 2020, as a record increase of manufacturing output was accompanied by a return to growth in the service sector for the first time since August 2020.

According to preliminary estimates, the headline IHS Markit Eurozone Composite PMI rose from 53.2 in March to 53.7 in April. Economists had forecast the indicator to increase to 52.8. The IHS Markit Eurozone Manufacturing PMI jumped to a fresh record high of 63.3 in April from 62.5 in March, beating economists' forecasts of 62. Meanwhile, the IHS Markit Eurozone Services PMI rose to an 8-month high of 50.3 from 49.6 in the previous month. Economists had expected the index to come in at 49.1.

FXStreet reports that economists at Credit Suisse note that EUR/GBP maintains a choppy tone and above 0.8703 can see a retest of key price and “neckline” resistance at 0.8721/32. Beyond here would now see a “head & shoulders” base established to mark a more important turn higher.

“EUR/GBP maintains a near-term choppy tone and the failure to follow-through to the downside following its recent bearish ‘reversal day’ and subsequent recovery rekindles thoughts of a potential basing process. Above 0.8703 can add weight to this view for a retest of key price and ‘neckline’ resistance at 0.8721/32.” 

"Beyond 0.8721/32 would now see a ‘head & shoulders’ base established to mark a more important turn higher with resistance then seen initially at the 38.2% retracement of the fall from December at 0.8761 ahead of 0.8793/99 and then more importantly at the ‘neckline’ to the medium-term top at 0.8851/61.” 

Honeywell (HON) reported Q1 FY 2021 earnings of $1.92 per share (versus $2.21 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.79 per share.

The company’s quarterly revenues amounted to $8.454 bln (-0.1% y/y), beating analysts’ consensus estimate of $8.067 bln.

The company also raised its guidance for FY 2021, projecting EPS of $7.75-8.00, up from $7.60-8.00 prior, versus analysts’ consensus estimate of $7.89 and revenues of $34.0-34.8 bln, up from $33.4-34.4 bln prior, versus analysts’ consensus estimate of $34.26 bln.

HON fell to $225.20 (-1.77%) in pre-market trading.

FXStreet reports that FX Strategists at UOB Group note that the selling pressure in USD/CNH remains well in place for the time being.

24-hour view: “Yesterday, we held the view that USD ‘could dip below 6.4850 but the next major support at 6.4700 is unlikely to come under threat’. We highlighted that ‘there is another minor support at 6.4800’. USD subsequently dropped to 6.4802 before rebounding. Downward pressure appears to have eased and for today, USD is likely to trade sideways between 6.4830 and 6.5030.”

Next 1-3 weeks: “USD broke 6.4850 yesterday and dropped to 6.4802. Despite the breach of 6.4850, downward momentum has not improved by much. That said, the risk is still for a lower USD but any weakness is expected to encounter solid support at 6.4700. O the upside, a breach of 6.5200 (no change in ‘strong resistance’ level) would indicate that the weakness in USD that started more than a week ago (see annotations in the chart below) has come to an end.”

American Express (AXP) reported Q1 FY 2021 earnings of $2.74 per share (versus $1.98 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.48 per share.

The company’s quarterly revenues amounted to $9.064 bln (-12.1% y/y), missing analysts’ consensus estimate of $9.189 bln.

AXP fell to $146.00 (-0.79%) in pre-market trading.

• As long as our medium-term inflation projections do not show clear improvement, we should accommodate increases in market-based long-term inflation expectations measures 
• A point target of exactly 2% would be "a good choice" regarding ECB's new inflation aim in the upcoming strategy review
• It may be “necessary” to allow national fiscal authorities scope for growth-enhancing fiscal policies within credible post-pandemic fiscal consolidation plans

FXStreet reports that the Credit Suisse analyst team suggests that GBP/USD below 1.3810/09 can end thoughts of a “double bottom”, clearing the way for a move back towards the lower end of the broader range at 1.3717.

“GBP/USD is not only back well below the ‘neckline’ to the ‘double bottom’ base at 1.3919 but also its rising 55-day average, throwing a serious question mark over this base. 

“Below 1.3810/09 would see the base fully negated to reinforce the broader sideways range again, albeit with an immediate downside bias. Support would then be seen next at the recent ‘reversal day’ low at 1.3717, below which can clear the way for a retest of the lower end of the sideways range at 1.3670/69. Whilst we would look for a fresh hold here, a break though would now instead complete a bearish continuation pattern.” 

Intel (INTC) reported Q1 FY 2021 earnings of $1.39 per share (versus $1.45 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.14 per share.

The company’s quarterly revenues amounted to $18.600 bln (-6.2% y/y), beating analysts’ consensus estimate of $17.968 bln.

The company also issued downside guidance for Q2 FY 2021, projecting EPS of $1.05 versus analysts’ consensus estimate of $1.10 and revenues of $17.8 bln versus analysts’ consensus estimate of $17.9 bln.

Intel raised guidance for FY 2021. Now, it sees EPS of $4.60, up from $4.55 previously (versus analysts’ consensus estimate of $4.61) and revenues of $72.5 bln, up from $72.0 bln previously (versus analysts’ consensus estimate of $72.95 bln).

INTC fell to $60.90 (-2.67%) in pre-market trading.

FXStreet reports that FX Strategists at UOB Group note that the outlook for USD/JPY remains tilted to the downside in the short-term horizon.

24-hour view: “In line with our expectations, USD traded between 107.80 and 108.23 before closing little changed at 107.96 (-0.08%). The bias for today appears to be tilted to the downside but the major support at 107.65 is unlikely to come under threat (107.80 is already quite a strong level). On upside, a break 108.25 (minor resistance is at 108.10) would indicate that the current mild downward pressure has eased.”

Next 1-3 weeks: “USD traded in a quiet manner for the past couple of days and our latest narrative from Tuesday (20 Apr, spot at 108.15) still stands. As highlighted, USD is likely to weaken further but the major support at 107.65 may not come into the picture so soon. On the upside, a break of 108.55 (‘strong resistance’ level previously at 108.85) would indicate that the pullback in USD that started about 2 weeks ago (see annotations in the chart below) has run its course. Looking ahead, the next support below 107.65 is at 107.30.”

Bloomberg reports that according to economists, a new state of emergency in Japan could trigger a double-dip recession if the tougher restrictions fail to curb infections or if they are prolonged.

Tokyo and three other prefectures that roughly account for a third of the economy are set to enter the state of emergency from Sunday, little more than a month after an earlier emergency was finally lifted in the capital. 

“Forget a V-shaped recovery,” economists at Daiwa Institute of Research wrote in a report. “The April to June quarter could see another three months of negative growth.”

So far economists are still expecting the economy to eke out growth this quarter as they scramble to revise their forecasts, having previously projected a firm rebound. But that outlook could quickly head further south if the emergency orders are extended beyond the currently planned May 11.

Daiwa’s Kanda calculates that the emergency call in the four prefectures will slice 600 billion yen ($5.56 billion) off the economy in a month. If the orders are expanded nationwide, the hit will amount to 1.6 trillion yen, he wrote.

FXStreet reports that economists at Westpac saw the underlying up trend as intact, even as the AUD/USD pair slipped under 0.7600 earlier this month, 

“The huge jump in spot iron ore prices to 10 year highs around $187/tonne are backed by record Chinese demand and the ongoing constrained supply confirmed by Vale, BHP and Rio this week. Australia seems set to continue to report historically large trade surpluses. We think the implications of the iron ore price surge are being underestimated in FX markets, with the midpoint of our short term fair value model rising to 0.80.”

“The US$ could, and arguably should, garner support from the super strong US data that will be released through May and beyond, plus the explosion of Covid cases in India; China/Taiwan incursions and Russian/Ukraine tensions could also exert downward pressure in risk sentiment in the weeks ahead.”

“We look to buy the dip below 0.7700, then add on any further weakness to 0.7600 with a target of the aussie returning to 0.8000 and potentially higher later in May-June.”

Reuters reports that a European Central Bank survey showed that euro zone economy will grow slower this year than earlier thought while a temporary surge in inflation is likely to exceed a previous projection.

But with vaccinations finally progressing, the economy is likely to grow quickly in the coming quarters, even if this rebound is now seen somewhat delayed, the latest edition of the ECB's Survey of Professional Forecasters, showed.

The euro zone economy is seen expanding by 4.2% this year, below a previous projection for 4.4%, but next year's growth outlook was upgraded to 4.1% from 3.7%, indicating that the eventual rebound could be steeper than earlier seen.

Inflation this year is now seen at 1.6%, according to the survey, above the 0.9% projected three months ago and also above the 1.5% forecast by the ECB staff in March.

But projections beyond 2021 were left unchanged with the 2025 forecast still at 1.7%, below the ECB's target of almost 2%, indicating that the bank is on course to undershoot its target for well over a decade.

FXStreet reports that economists at Capital Economics don’t see a fundamental argument for lower long-term yields, and think that they will resume their rise before long.

“Very rapid economic growth is on the way this year and next. We think the stage is set for a significant pick-up in inflation in the near-term, perhaps even more than is currently discounted in markets. And this may cause investors to factor in a tighter stance of policy further down the line, even if they believe the Fed when it suggests it is in no rush to tighten over the next couple of years. We expect this to help push up long-term real yields over the next couple of years. We forecast it to reach 2.25% and 2.50% by end-2021 and end-2022, respectively, compared with its current level of ~1.6%.”

According to the report from IHS Markit/CIPS, April PMI data illustrated a strong revival in UK private sector output after the downturn seen at the start of 2021 during the full national lockdown. Moreover, for the first time since the COVID-19 pandemic began, service activity growth outperformed manufacturing production. This was largely due to a boost from easing government stringency measures regarding some consumer services and non-essential retail in England and Wales from mid-April, with Scotland and Northern Ireland set to follow similar reopening paths by the end of this month.

At 60.0 in April, up from 56.4 in March, the headline seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index registered above the 50.0 no-change value for the second month running and moved further ahead of January's recent low (41.2). The latest reading signalled the strongest overall increase in UK private sector output since November 2013.

Service activity (index at 60.1) expanded to the greatest extent since August 2014, while manufacturing production growth accelerated to its fastest for eight months. Survey respondents overwhelmingly attributed higher levels of output to the improving pandemic situation and confidence towards the sustainability of the recovery in the months ahead.

The index measuring business expectations for the next 12 months held close to the series-record high seen in March. Positive sentiment about the UK economic outlook helped to boost private sector employment during April. Latest data pointed to the steepest rate of job creation since August 2017 and comments from survey respondents mostly noted additional staff hiring as opposed to the impact of recalls from furlough. 

According to the report from IHS Markit, eurozone business activity grew at a stronger rate in April, the rate of increase accelerating to the fastest since last July as a record expansion of manufacturing output was accompanied by a return to growth in the service sector for the first time since last August.

The headline Eurozone Composite PMI® rose from 53.2 in March to 53.7 in April. Output has now risen for two months after four months of decline, with the latest expansion the second-largest recorded since September 2018.

Manufacturing output grew for a tenth straight month, expanding at a rate unsurpassed in over two decades of survey history. Germany led the factory upturn, its rate of increase easing only slightly from March’s all-time high to remain the second-strongest on record. France’s factory expansion also slowed slightly, though remained the second best seen over the past three years. Record manufacturing output growth was meanwhile seen across the rest of the region as a whole.

The service sector continued to lag behind, principally reflecting further efforts to contain the spread of COVID-19 in many member states, though nevertheless reported the first expansion of activity since last August, albeit growing only very modestly. The return to service sector growth seen in Germany during March came close to stalling after new lockdown measures were introduced to control further waves of the virus, but both France and the rest of the eurozone saw marginal expansions for the first time since last summer as companies prepared for better times ahead.

According to the report from IHS Markit, April’s ‘flash’ PMI data showed a slowdown in growth across Germany’s private sector, with services activity stalling and the upturn in manufacturing production partly held back by supply shortages. The pace of job creation nevertheless gathered speed, driven largely by increased efforts by goods producers to expand capacity as well as positive expectations for future activity. April meanwhile saw businesses’ costs rise at the fastest rate for more than a decade amid widespread reports of an imbalance of supply and demand for inputs as well as higher fuel and energy prices. Charges were raised accordingly, albeit with the survey indicating the partial absorption of higher costs by businesses.

The headline Flash Germany PMI Composite Output Index ticked down from a 37-month high of 57.3 in March to 56.0 in April. The survey’s manufacturing output index remained in strong growth territory, at 67.7, but signalled a slight loss of momentum since March (68.9) amid several reports from surveyed firms of supply issues holding back production. Business activity across the service sector meanwhile stalled in April (index at 50.1 from 51.5) as companies cited the impact of the pandemic and stricter lockdown measures.

During today's Asian trading, the US dollar was trading near multi-week lows against major currencies as traders ponder the next steps of major central banks ahead of the US Federal Reserve meeting next week.

The euro fell modestly yesterday after European Central Bank President Christine Lagarde dashed expectations that policymakers would start considering reducing bond purchases as the economic outlook improves.

Fed Chairman Jerome Powell is likely to repeat Lagarde's message that it is premature to talk about a gradual rate cut, which will put downward pressure on treasury yields and limit the dollar's gains against most currencies.

The Fed's next meeting ends on April 28, and while no major policy changes are expected, investors are paying close attention to any comments about the possibility of reducing monetary easing in the future.

Analysts say rising coronavirus vaccination rates and an improving economic outlook are reasons for optimism, but investors are lowering expectations of a reversal of monetary easing after Lagarde said talk of ending emergency bond purchases is premature.

The pound rose moderately against the US dollar after the release of the UK data. According to the report from Office for National Statistics, retail sales volumes continued to recover in March 2021, with an increase of 5.4% when compared with the previous month reflecting the effect of the easing of coronavirus (COVID-19) restrictions on consumer spending. Economists had expected a 1.5% increase. Sales were 1.6% higher than February 2020 before the impact of the coronavirus pandemic.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2127 (1451)

$1.2094 (1343)

$1.2068 (3325)

Price at time of writing this review: $1.2026

Support levels (open interest**, contracts):

$1.1976 (902)

$1.1952 (1350)

$1.1921 (1110)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 7 is 52491 contracts (according to data from April, 22) with the maximum number of contracts with strike price $1,2000 (3325);

GBP/USD

$1.4027 (1133)

$1.3958 (1855)

$1.3907 (529)

Price at time of writing this review: $1.3860

Support levels (open interest**, contracts):

$1.3782 (676)

$1.3760 (345)

$1.3733 (404)

Comments:

- Overall open interest on the CALL options with the expiration date May, 7 is 12309 contracts, with the maximum number of contracts with strike price $1,4200 (2953);

- Overall open interest on the PUT options with the expiration date May, 7 is 17935 contracts, with the maximum number of contracts with strike price $1,3750 (1922);

- The ratio of PUT/CALL was 1.46 versus 1.43 from the previous trading day according to data from April, 22

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

According to the report from Office for National Statistics, public sector net borrowing in the UK is estimated to have been £28.0 billion in March 2021, £21.0 billion more than in March 2020, above forecasts of £22.5 billion. It is the highest March borrowing since monthly records began in 1993. 

Public sector net borrowing in the financial year-to-March 2021 is estimated to have been £303.1 billion, £246.1 billion more than in the same period of 2020 and the highest nominal public sector borrowing in any financial year since records began in 1947. 

Expressed as a ratio of gross domestic product (GDP), public sector net borrowing (excluding public sector banks, PSNB ex) in the FYE March 2021 was 14.5%, the highest such ratio since the end of World War Two, when in FYE March 1946 it was 15.2%.

Public sector net borrowing (excluding public sector banks, PSNB ex) in the FYE March 2021 is estimated to have been £24.3 billion less than the £327.4 billion expected by the Office for Budget Responsibility in their Economic and Fiscal outlook – March 2021 on a like for like basis.

According to the report from Office for National Statistics, retail sales volumes continued to recover in March 2021, with an increase of 5.4% when compared with the previous month reflecting the effect of the easing of coronavirus (COVID-19) restrictions on consumer spending. Economists had expected a 1.5% increase. Sales were 1.6% higher than February 2020 before the impact of the coronavirus pandemic.

Non-food stores provided the largest positive contribution to the monthly growth in March 2021 sales volumes, aided by strong increases of 17.5% and 13.4% in clothing stores and other non-food stores respectively.

Food stores reported monthly growth of 2.5% in March 2021, with strong growth in specialist food stores (butchers and bakers) likely reflecting the continued closure of the hospitality sector during the Easter period.

Automotive fuel retailers also reported strong monthly growth of 11.1% as travel restrictions were eased towards the end of the reporting period.

Despite strong March figures, retail sales for the quarter have been subdued overall; in the three months to March 2021, retail sales volume fell by 5.8% when compared with the previous three months, with strong declines in both clothing stores and other non-food stores as a result of the tighter lockdown restrictions in place.

The proportion spent online decreased to 34.7% in March 2021, down from 36.2% in February 2021 but still above the 23.1% reported in March 2020; the value of online spending did increase in March, but spending in-store increased at a faster rate.